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Tax transparency in Europe: a dangerous loophole

Published on

07/04/2017

The European Parliament voted today to strengthen rules on tax transparency for multinational corporations, but included a significant loophole which could undermine the efforts to stop multinational corporations from hiding profits in tax havens.

Global Alliance for Tax Justice's regional network member Eurodad published civil society's position on this #CBCR vote:

"While MEPs voted to require multinationals to publish data on the profits and taxes they pay on a country by country basis for each country where they operate, they also introduced a loophole, which allows multinational corporations to ask for exceptions to the disclosure of certain detailed information in specific countries. This introduces the risk that multinational corporations can keep hiding their profits in tax havens..

“The Conservatives and Liberals successfully introduced a loophole, which can become a bomb under the efforts to make multinational corporations pay taxes. They added a new complicated exemption clause, which might be exploited by multinational corporations looking to keep profits hidden in tax havens,” said Tove Maria Ryding, tax campaigner at Eurodad, the European Network on Debt and Development. “As a result, citizens, journalists, civil society organisations and parliamentarians may not be able to get the necessary information that they need to identify multinational corporations dodging taxes.”

“The EU has already introduced public country by country reporting for the banking sector with no exemptions,” said Ryding. “We are very disappointed they haven’t done the same for all large multinational corporations. We need more clarity on what the exemptions will mean in detail, to ensure the new mechanism cannot be misused by big businesses trying to hide their profits in tax havens. It’s also vital to ensure that the Parliament’s proposals are not watered down even further by Member States in the coming months.”

Before the debate and the vote took place, civil society participants organized a creative campaign action in front of the European Parliament in Strasbourg, France: NGOs set up a "classical" tax haven scene in Strasbourg with the European Parliament and EU flag in view - palm trees, sand and "deckchairs with rich company bosses reclining and relaxing in them". In front of the palm trees Oxfam, TI and CCFD set up a theatrical tug of war taking place: "On the one side the small but powerful elite of MNCs - identified by their smart suits with money spilling out of their pockets - is tugging at the rope. In the middle we have the EU, represented as a flag. On the other side are lots of citizens, pulling the rope hard and trying to get the EU to listen".

The message, "Will the EU side with the interests of MNCs or citizens?" received a broad media coverage (TV, radio, web, paper).

Meanwhile, Tax Justice Europe's members participated in a twitter storm from their respective countries, addressing their MPs - Here, they could still use the very useful Eurodad's dedeicated website endsecrecy.eu:

Oxfam EU's position is concording, and summarized in an article published today, titled "Tax transparency on the way despite MEPs’ still bowing to big business".

Oxfam’s EU Policy Advisor on tax, Aurore Chardonnet, said:

“The European Parliament’s vote is a small step towards greater tax transparency. But companies can still hide key tax information if they want to, due to a get-out clause.

Many EU parliamentarians seem to still prioritize large multinationals over citizens and SMEs, despite scandals such as Luxleaks and the Panama Papers. Hundreds of thousands of EU citizens want governments to demand companies to publicly declare where they do their business and where they pay their taxes.

It is now down to European member states not to block reforms, otherwise the tax system will remain skewed in the interests of profit and not people.”

“The European Parliament’s vote is a small step towards greater tax transparency. But companies can still hide key tax information if they want to, due to a get-out clause.

Many EU parliamentarians seem to still prioritize large multinationals over citizens and SMEs, despite scandals such as Luxleaks and the Panama Papers. Hundreds of thousands of EU citizens want governments to demand companies to publicly declare where they do their business and where they pay their taxes.

It is now down to European member states not to block reforms, otherwise the tax system will remain skewed in the interests of profit and not people.”

“The European Parliament’s vote is a small step towards greater tax transparency. But companies can still hide key tax information if they want to, due to a get-out clause.

Many EU parliamentarians seem to still prioritize large multinationals over citizens and SMEs, despite scandals such as Luxleaks and the Panama Papers. Hundreds of thousands of EU citizens want governments to demand companies to publicly declare where they do their business and where they pay their taxes.

It is now down to European member states not to block reforms, otherwise the tax system will remain skewed in the interests of profit and not people.”

“The European Parliament’s vote is a small step towards greater tax transparency. But companies can still hide key tax information if they want to, due to a get-out clause.

Many EU parliamentarians seem to still prioritize large multinationals over citizens and SMEs, despite scandals such as Luxleaks and the Panama Papers. Hundreds of thousands of EU citizens want governments to demand companies to publicly declare where they do their business and where they pay their taxes.

It is now down to European member states not to block reforms, otherwise the tax system will remain skewed in the interests of profit and not people.”

“The European Parliament’s vote is a small step towards greater tax transparency. But companies can still hide key tax information if they want to, due to a get-out clause.

Many EU parliamentarians seem to still prioritize large multinationals over citizens and SMEs, despite scandals such as Luxleaks and the Panama Papers. Hundreds of thousands of EU citizens want governments to demand companies to publicly declare where they do their business and where they pay their taxes.

It is now down to European member states not to block reforms, otherwise the tax system will remain skewed in the interests of profit and not people.”

“The European Parliament’s vote is a small step towards greater tax transparency. But companies can still hide key tax information if they want to, due to a get-out clause.

Many EU parliamentarians seem to still prioritize large multinationals over citizens and SMEs, despite scandals such as Luxleaks and the Panama Papers. Hundreds of thousands of EU citizens want governments to demand companies to publicly declare where they do their business and where they pay their taxes.

It is now down to European member states not to block reforms, otherwise the tax system will remain skewed in the interests of profit and not people.”

Tax transparency on the way despite MEPs’ still bowing to big business

Tax transparency on the way despite MEPs’ still bowing to big business

You can find Eurodad's article here and Oxfam EU's article here. You can also follow the discussion on Twitter via #taxtransparency.